The company does not only carry the whole process of innovation internally, external resources also take place. Money plays an essential role in the whole process in Sony a limited being a company at a large scale needless of providing these factors. Sometimes when the company does not have enough funds to support the research and development, or any service carried out towards a successful innovation, then the company needs investors. People from outside business such as the investors play a crucial role in the innovation process. The organization must keep a good relationship with investors, informing about their innovative activities and ensuring confidence and strong long-term relationships. Though some external business make difficult for the organization to take over whole of the innovation. Such as the government needs to put limits to the organization, to which extent they can innovate.
A company not always succeeds in their first innovation; the failure rate of innovative new products is quite high…
Sony ltd (1981) – 20% of research and development projects have resulted in commercial success.
Sony Ltd (1981)- a. 60% reached technical completions
b. 30% were commercialized.
c.12% earned profits that exceeded Sony’s cost of sales.
1991 – at least 45% of new products introduce in the new market do not meet their profitability goals.
The reasons for Sony’s failures probably can be:
Uncertainty- Doubts within the business may take place; the business in some cases tends to me emphasized in not having a complete confidence in their plans or decisions.
Poor commercialization- Possibilities take place of not having interacted with the customers as required, and so these may not have been aware of the new product in the market.
Slow to market- Some times the organizations is not aware of the demand that may satisfy the customer and by the time the products reaches to the market, it might be too late.
Poor positioning strategy- a business should focus on the product and the place. One reason of Sony’s failure might be heading for a wrong market, at a wrong time. (Appendix 1)
There are four main innovation strategies:
Fast follower – It may give advantage to a business if it has quick reactions toward the competitor’s actions and the customer demand. A business must take quick actions in regard to the changes in the market and follow the demand and customers actions.
Market segmentation- Once the Sony’s has faced a failure due to not aiming at the correct market, if it improves the product and supplies it to where it is required, the innovation might be more successful.
Leadership- A Leader must have a good relationship between its customers and the staff and as well as a good communication towards these.
Cost minimization- The less the costs are, the more quickly cash comes in the organization and facilitates the investment towards new demand, new ideas.
For Sony to create an effective and profitable product it is very important that the efficiency of day-to-day operations within the company that match the creativity in the development of new products and services and also there is enough room to try out new ideas.
For new product as we said above, market research is an important factor for managing uncertainty for continuous innovation. But on the other hand it can prove very ineffective at reducing risks for discontinuous innovation. Sony has shown that experimenting with new concepts products or services in small niche markets allow organizations to establish the potential of risk and ease for uncertainties. Another reason for innovation to be an important factor is that innovative employees show significant improved performance when their managers practice a fair leaderships style. Where employees suggestions are captured as internal ideas, these successful ideas are countered as a reward and failures are regarded as a part of a learning process. As a company seeks collaboration with other firms, it maximizes the knowledge and minimizes the risks.
Recognizing opportunities for discontinuous innovation is very important. There is a famous equation, which is:
Innovation= theoretical conceptions + technical invention + commercial exploitation
For example Sony innovated a Walkman, which was patented. This allowed only the Sony organization to use this name and protect it from any other competitors. This proves them finding a niche in the market. (appendix 1)
Conclusion-
In my opinion the capacity of the firm to innovate depends on many factors, not least the effort the make to create new products or improve production processes, the extent of skills in their staff, their ability to learn and the general environment in which they operate.
Sony being a successful organization has achieved effective factors by continuous innovation. Though the company using innovation could make the product effective and be ahead of the competitors, some strict government rules take place and other restrictions in the business, which do not allow the Sony to excess their limits. The innovation capacity of an organization is depended on how the culture of the firm is in both the internal and the external environment.
APPENDIX 1:
Sony: The Leader in Product Innovation
The new millennium is here and Sony has plenty to celebrate. The company’s approach – doing what others don’t – has paid off, in the form of great products that people covet.
Throughout its history, Sony has demonstrated an ability to capture the imagination and enhance people’s lives. The company has been at the cutting edge of technology for more than 50 years, positively impacting the way we live. Further, few companies are as well positioned to drive the digital age into homes and businesses around the world for the next 50 years and beyond.
Sony innovations have become part of mainstream culture, including: the first magnetic tape and tape recorder in 1950; the transistor radio in 1955; the world’s first all-transistor TV set in 1960; the world’s first color video cassette recorder in 1971; the Walkman personal stereo in 1979; the Compact Disc (CD) in 1982; the first 8mm camcorder in 1985; the MiniDisc (MD) player in 1992; the PlayStation game system in 1995; Digital Mavica camera in 1997; Digital Versatile Disc (DVD) player in 1998; and the Network Walkman digital music player in 1999.
Today, Sony continues to fuel industry growth with the sales of innovative Sony products, as well as with the company’s convergence strategy. Examples include: VAIO notebooks that raise the bar in both form and function; digital cameras that capture pictures on a floppy disk, CD-R or Memory Stick; a handheld device that lets you store and view photos as well as moving photo; MiniDisc recorders with a digital PC Link to marry high quality digital audio with downloadable music; DVD/CD multi-disc changers that playback both audio and video; digital network recorders that pause, rewind and fast-forward "live" television using a hard-disc drive; and Hi-Scan flat screen TVs that deliver near HDTV picture quality through Digital Reality Creation (DRC) circuitry.
But Sony is not just the market leader in consumer electronics.
Through research and development, the company has made considerable inroads in the areas of professional broadcasting (with the creation of the Betacam, DVCAM, HDCAM and 24P formats); mobile communications (with digital phones and the CLIE handheld); PCs (with VAIO notebook and desktop computers); storage and media (with the invention of the floppy disk, AIT and DTF drives, and the Memory Stick) and, now, the Internet.
Sony’s future brand success will be determined by how the company meets the challenges of change. Sony has always led the market in terms of innovation. But in a digital networked world, products will no longer be developed with just hardware in mind. The convergence of technologies – consumer electronics, computing and telecommunications – is a reality, with new competitors forming and consumer mind share up for grabs.
APPENDIX 2:
